Vertical Farming Market Size, Share & COVID-19 Impact Analysis, By Type (Hydroponics, Aeroponics and Aquaponics), By Structure (Building-Based Vertical Farm and Shipping-Container Vertical Farm), By Component (Lighting System, Irrigation & Fertigation System, Climate Control, Sensors, and Others), and Regional Forecast, 2021-2028

The global vertical farming market size was USD 3.04 billion in 2020. The global impact of COVID-19 has been unprecedented and staggering, with vertical farming witnessing a positive demand shock across all regions amid the pandemic. Based on our analysis, the global market exhibited a significant growth of 19.1% in 2020. The market is projected to grow from USD 3.64 billion in 2021 to USD 17.59 billion in 2028 at a CAGR of 25.2% during the 2021-2028 period. The steady rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.

Vertical farming has improved the ability to cultivate various harvests at once by using controlled environment technology. This type of farming requires less land and thus reduces the challenges of declining arable land. Some of the added advantages of this type of farming include improved efficiency, resistance to weather, low water wastage, food security, and environmental conservation. Considering the growing trend, the market is witnessing massive investment across the globe. For instance, in February 2021, McCain Foods Limited announced a substantial investment in a commercial vertical agriculture operation, TruLeaf Sustainable Agriculture in Canada. The company aims to expand its growth in the agri-food sector by offering fresh and nutritious food.

COVID-19 Impact

Supply Chain Disruption to Impact Market During Pandemic

The COVID-19 pandemic has impacted most businesses, including agriculture farming, due to various factors, including the shortage of supplies, supply chain disruption, and the termination of contracts to control expenses. Some impacts were immediate in most countries, such as shutting down the business. However, the market has rather hit smaller speed bumps. Although the business requires massive capital for launching and the product is also not cheap, its demand is expected to grow in a pandemic situation. The business is energy-intensive because of light-emitting diodes (LEDs). The companies are installing solar panels to make the system a more carbon-neutral process.

Some of the major factors impacting the market during these pandemic situations are:

• COVID-19 bolsters demand for locally-grown greens, enhancing the demand for vertical farming.


• Investors are finding the business attractive owing to the farms offering organic fruits and vegetables while consuming less water and per unit area of land when compared to conventional farming.


• Increased production capacity, localization, and short supply chain systems prove to be more robust during this crisis.

Thus, during the pandemic, the market witnessed a significant impact on growth rate. However, the market is expected to gain remarkable growth post-crisis.

LATEST TRENDS

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Integration of Advanced Technologies to Boost Market Potential

Technologies such as the internet of things, smart and connected devices, drones, mobile applications, etc., empower the vertical farming producer with real-time information. The timely information about crop health and the environment is difficult to manage manually. Automation and information technology offer effective crop production technology.  For instance, Plenty’s indoor farm based in San Francisco has integrated big data, IoT, climate control, and machine learning technologies with crop science. This helps the company to grow tasty and healthy food with monitored energy and water usage.

Integration of various types of technology together can offer a simulated environment for indoor crop growth. The changing environment in the farming facility can be constantly analyzed using IoT and big data analytics. IoT can perform as the backbone of vertical type of farming. For instance, an India-based company, Bimantis, has developed an advanced farming system with an IoT-powered solution, TheGreenSage. The solution offers automatic monitoring and control of the external environment such as light, nutrients, air quality, and plant growth levels. As the solution uses connected technologies, the changes in the system and facility centers are automated.

Thus, the increasing technological advancement with the system is expected to surge the market growth.

DRIVING FACTORS

Growing Need for Independent Farming Technique to Tackle Climatic Conditions to Aid Growth

The growing urbanization, rising population, shrinking water supply, and continuing climate change have contributed to the lack of arable land availability. According to the Economic League Organization study, 80% of total arable land is already occupied, and by 2050, 109 million arable hectares more land will be required to fulfil the growing food demand. Similarly, the world is rapidly heading towards a water crisis. Future climate changes are expected to worsen water scarcity and likely to affect the food system. As per the United Nations, more than 60% of the world population is expected to live in water-stressed regions by 2050.

With the growing population and ongoing developments in global food markets, approaches for more robust crop cultivation need to be brought closer to urban environments. Vertical type of farming technology has recently emerged as a potential agricultural solution. The technology occupies less space, and the system uses controlled transpiration, unlike the traditional farming ways. This is likely to drive the vertical farming market growth.

RESTRAINING FACTORS

High Cost of Initial Investment to Challenge Market Potential

The availability of space, light, water, carbon dioxide, and land is easily available in traditional farming. However, for this type of farming, all these factors require supplying cost. Light in the vertical farms is supplied artificially. The air conditioning and heating required for maintaining the required temperature, precision monitoring, and other related software also add up the cost.  Similarly, to deliver nutrients and a platform for crop growth, certain structures need to be built. Thus, the maintenance and the resource supply cost are considerably high in this type of farming.

SEGMENTATION

By Type Analysis

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Increasing Demand for High-Quality Food to Boost Hydroponics Growth

Based on type, the market is categorized into hydroponics, aeroponics, and aquaponics.

The hydroponics segment is expected to showcase significant growth during the forecast period. Hydroponics is the technique or system wherein better quality plants are grown without the soil. The technique is capable of enhancing per area yield along with reducing the usage of water. Thus, owing to the growing water crisis, the demand for hydroponics is increasing.

Aeroponics and aquaponics, among the systems, modify the natural environment to enhance aquaculture and allow plants to be grown in space. Among these, aeroponics is expected to exhibit strong CAGR in the forthcoming years.

By Structure Analysis

Trend of Providing Vertical Farming Structures in New Construction to Boost Building-based Share

Based on structure, the market is bifurcated into building-based and shipping-container.

The building-based segment is expected to dominate during the forecast period. The demand for these structures is growing due to their capability to adopt any land area for cultivation by using tall vertical buildings or towers. Besides, new buildings and construction projects are also constructing spaces to install the structures.

The shipping containers are widely used for installing indoor farming structures/ systems. These containers prove to be standard, as well as modular chambers to grow multiple varieties of crops. Since these shipping containers are recycled, stacking these systems will increase the cultivation space and help achieve increased yield per unit of land. This is expected to bode well for the segmental growth in the forthcoming years.

By Component Analysis

Cost-effective LEDs to Boost the Market Potential

Based on the component, the market is categorized into the lighting system, irrigation and fertigation system, climate control, sensors, others.

The lighting system segment holds the highest vertical farming market share of the global market, owing to the dependence of vertical farming systems on artificial lighting systems. Artificial lights imitate light intensity, which is required for growing crops.

The climate control component segment is expected to register the highest CAGR during the forecast period. The growing demand for unseasonal food across the year is driving the adoption of climate control components.  

The sensors and irrigation & fertigation systems enable comprehensive monitoring and providing the same ecosystem to the crops as the external environment and condition. This is likely to lead to the segments gaining steady growth during the forecast period.

REGIONAL INSIGHTS

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By region, the market has been analyzed across five major regions, namely, North America, Europe, Asia Pacific, the Middle East & Africa, and Latin America.

North America is expected to significantly contribute to the global vertical farming industry growth during the forecast period. The increasing demand for rich quality, organic food and fresh food drives the development of vertical farms in the developed countries such as the United States. Further, Canada and some states of the US have legalized the usage of Cannabis. The system is suitable for growing cannabis, and thus the adoption of this farming system is gaining traction. For instance, in January 2019, Thrive Agritech, Inc. delivered its 1,900 LED grow lights to marijuana producer Choice Laboratories in Michigan. This is to provide better plant quality and to reduce operational costs.

Europe is expected to hold the second position in the market during the forecast period.  Countries like Germany, France, Spain, and the Netherlands are expected to lead the market. Some producers are encouraging the clients to opt for the farming system at home. For instance, France AgriCool company aims to convert its potential customers into farming to expand pesticide-free farming.

Asia Pacific is anticipated to showcase significant growth during the forecast period. The declining arable land for traditional agriculture in countries like India, China, and some Asian countries is expected to boost the market growth opportunities. The vertical farming techniques are expected to have consistent growth in progressing countries owing to the increase in the adoption of advanced solutions to optimize growing food demand.

The less availability of fertile land and growing water scarcity in the Middle East and Africa region is expected to boost the market growth. The region’s maximum investment in the food industry is in importing fresh food. This is driving the adoption of vertical farming solutions in the region.

Latin America is likely to gain steady growth owing to the shift in food consumption habits towards a more organic green leaf diet. This is likely to fuel the farming demand.

KEY INDUSTRY PLAYERS

Key Players Are Highly Investing in Building New Farms Globally

The key players in the market such as AeroFarms, Signify, BrightFarms., Illumitex Inc., Heliospectra AB, and Freight Farm, among others, are focusing on business expansion through strategic partnership and collaboration with other organizations. These players are investing in globalizing the vertical farming concept by building new farms across countries. The prominent players are also investing in research and development to reduce the additional charges of the system. 

April 2020 - AeroFarms announced plans to build an indoor vertical farm in Abu Dhabi for research and development of the relevant local crop. Under the Abu Dhabi Investment Office (ADIO), the company invested USD 100 million for this project.

April 2020 – AeroFarms announced USD 42 million to build an indoor vertical farm in Cane Creek Centre of Danville. The company is expanding its business through America to offer enriched quality food.

LIST OF KEY COMPANIES PROFILED:

• AeroFarms (New Jersey, United States)


• BrightFarms. (New York, United States)


• Plenty (California, United States)


• Freight Farms, Inc. (Massachusetts, United States)


• Illumitex Inc. (Texas, United States)


• 4D Bios, Inc. (Massachusetts, United States)


• Thrive Agritech (New York, United States)


• Heliospectra AB (Sweden)


• Everlight Electronics (Taiwan)


• Signify (The Netherlands)


• Osram (Munich, Germany)


• Sky Greens (Singapore)


• Spread Co., Ltd. (London, UK)


• Valoya Ltd. (Finland)


• Bowery Farmi (New York, United States)


• Green Spirit Farms (Massachusetts, United States)


• Green Sense Farms LLC (Portage, United States)

KEY INDUSTRY DEVELOPMENTS:

• October 2020 – BrightFarms secured USD 100 million to expand its indoor farming. Cox Enterprises led the Series E round of funding. BrightFarms aims to use this funding to further invest in its retail and current farms and expand its network of regional indoor farms across the United States.


• February 2020 – Illumitex Inc. announced the launch of a computer-vision-based artificial intelligence platform to accelerate FarmVisionAI. It offers augmented AI and visualization to control the farming environment.            

REPORT COVERAGE

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The global vertical farming market research report highlights leading regions worldwide to offer a better understanding to the user. Furthermore, the report provides insights into the latest industry growth trends and analyzes technologies deployed at a rapid pace at the global level. It further offers some drivers and restraints helping the reader gain in-depth knowledge about the market.

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